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Special Loans

Written by: Zeeman Haus

Article Overview: What are special loans? Well let’s define them as loans that are not the usual type. If that seems a little vague to you, you’re not alone. A special loan would be a loan outside of the typical- go to the bank, sign some papers and make payments or they are going to take your boat- kind of loan. Sometimes we’re all forced to get a little creative. When that happens, special loans are what will pull us through. A special loan in the way of a house mortgage is often the first kind that you will run into. These loans are generally backed by a government agency such as HUD (Housing and Urban Development). These loans are guaranteed by the government to be paid. They do this by insuring the loan. They do not assume the entire loan should the person responsible for the loan default, but instead act as an insurance mechanism that will defer s

Special Loans



What are special loans? Well let’s define them as loans that are not the usual type. If that seems a little vague to you, you’re not alone. A special loan would be a loan outside of the typical- go to the bank, sign some papers and make payments or they are going to take your boat- kind of loan. Sometimes we’re all forced to get a little creative. When that happens, special loans are what will pull us through.

A special loan in the way of a house mortgage is often the first kind that you will run into. These loans are generally backed by a government agency such as HUD (Housing and Urban Development). These loans are guaranteed by the government to be paid. They do this by insuring the loan. They do not assume the entire loan should the person responsible for the loan default, but instead act as an insurance mechanism that will defer some of the cost should the mortgage not reach fruition.

A VA or Veteran’s Administration loan does not generally require a down payment and will often be processed faster than a standard loan. The VA also helps provide for loans for education through the G.I. Bill. Thought this is not exactly a loan, it is helpful information.

Another creative loan process for a mortgage is to simply get on a “rent to own” program with a local real estate mogul. These companies and individuals will allow a portion of your rent to go into an escrow account to be used at a later date for the purpose of providing a substantial down payment on a house, generally the home you are currently renting. For those who have poor credit, this is a boon. The advantages of such a payment plan are clear, however the draw backs are there as well. In some cases, by missing a month’s rent or opting out at a later date, a portion of the “extra” money is forfeit and the lendee is left with not much after penalties are assessed.

Outside of mortgage loans other special loans include payday loans, one of my least favorite types. These loans require a checking account and some proof of job history. With these loans, one has to generally pay 20% of the loan back every week to two weeks. This would mean that a $100 loan would cost you $20 plus the original $100. That’s not too bad unless you consider that you might not have the complete $120, at which point the lender will kindly extend the offer for you to pay the interest and whatever you can on the principle. The downside is that you will owe 20% of whatever is left over on the principle in two weeks. This can lead to a downward spiral with no end in sight. In most cases, that simple $100 loan will cost you a lot more than $20 in the end.

There are a ton of special loans options out there for personal finance as well as business finance. One thing to be aware of is all of the scam sites on the internet. Be careful. If a site is offering you a line of credit or anything hugely disproportionate to the down payment or refers to the down payment as a service fee or finder’s fee, shy away. Often you will find yourself needing a loan to cover the money you just spent trying to get a loan.

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Article Tags: government agency, housing and urban development, hud housing, insurance, loan default, mortgage, special loan, special loans
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